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Online Fashion Space to Get More Competitive

Wed, 29 Jun Pre-Open

Nowadays, e-commerce space is the topic of discussion. Whether, it is related to offering steep discounts, their business model, intense competition among e-commerce players, rounds of investments by venture capital firms, or a recent valuation mark down.

The Indian ecommerce scene has changed dramatically over the last six-seven years. The kind of goods that are now available online was absolutely unthinkable a few years back. Everything from furniture to electronics to shoes to clothes is now available online.

Traditional retail players focused more on metros and Tier 1 cities. At the same time, brick & mortar model was considered most viable. However, the trend has changed substantially in the recent years. There was a time when industry experts were of the opinion that fashion products have less potential for e-tailing due to issues such as fit and feel. However, due to the rigorous and committed efforts of the fashion e-tailing players, Indian consumers have accepted e-tailing as a convenient model for fashion purchases.

Although, this is just one side of the story. Another part should not be ignored. There is intense competition among e-commerce players, discount wars, flash sales, and cash backs.

Now, online fashion retail, an important part of e-commerce space is set to get more intense and competitive with an entry of conglomerates such as Tata group, Aditya Birla group, Reliance Industries and large retail companies such as Arvind Ltd. So far, this segment is dominated by companies such as Myntra (owned by Flipkart), Jabong.com, Yepme, Fashion and you etc. Recently, Aditya Birla Group started a website, abof.com (an acronym for all about fashion) selling products from the parent Aditya Birla Group brands. Similarly, Arvind Internet Ltd, the e-commerce division of textiles manufacturer Arvind Group runs nnnow.com. The flurry of new entrants, each coming in with its own strategy, is forcing the market to adjust quickly.

What will happen in the coming months? No doubt, there will be an intense competition among the online retailers which will lead to severe discount wars. In order to compete with other players, they would require a war-chest. For this, online retailers would require a fresh round of funding. However, it is not easy to get funding as institutional investors and VC firms are now questioning the business models of e-commerce companies. Eventually, this will lead to a shakeout in the e-commerce space. Only the fittest and those with cash will survive.

The transition from offline to online won't be easy for established big players such as Aditya Birla, Arvind, and other large conglomerates. However, they have deep pockets and know the inside out of the retail business.

Whatever happens, it will be tough for both existing online players and big conglomerates entering the online fashion space. This does not look to be a quick and bloodless affair.

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